NGOs concerned that increased involvement of business in aid programmes could compromise development objectives. (
http://www.theguardian.com/global-development/2014/may/14/eu-warned-private-sector-involvement-aid-profit-before-poverty?CMP=twt_fd)
Sam Jones
New European commission proposals to boost the role of business in
aid programmes and throw the EU's weight behind the development agenda of private companies risk putting profits before the needs of the world's poorest, groups representing hundreds of NGOs have warned.
In a
policy paper released on Tuesday, the commission noted the vital part the
private sector can play in ending poverty, suggesting 12 ways of strengthening its role in international development.
The formal communication – entitled A Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Developing Countries – seeks to lay out a framework in which private companies can invest in sustainable agricultural production and help to better the lives of women, young people and the poor.
The proposals include: improving regulatory business environments in partner countries; encouraging job creation by making it easier for micro-, small- and medium-sized businesses to access finance; combining EU grants with other public and private sector resources to leverage additional financing; and promoting responsible, sustainable and inclusive investment in developing countries.
Though the commission has spent about €350m (£284m) a year supporting private sector development over the past decade, the paper's assertion that the EU should use its political might to support the private sector's development aims is proving controversial.
"A common view expressed during consultations with stakeholders in the preparation of this communication is that the EU's political weight represents a comparative advantage that it should harness more fully in support of private sector development objectives," it said. "To this end, the commission will seek to further increase the positive interaction and private sector development impact of EU policies and instruments regarding trade, enterprises, employment and other relevant fields."
The EU development commissioner, Andris Piebalgs, said that although the private sector had a "crucial role" to play in helping people lift themselves out of poverty, it had to make sure its involvement benefited all concerned.
He added: "That's why the new communication is so important – ensuring that businesses find an enabling environment to invest more, and more responsibly, in developing countries to help everyone enjoy the economic opportunities which the private sector can bring."
However, the proposals met with a wary response from NGOs.
"There is currently a dangerous emphasis on using EU power to push change in developing countries without recognising that narrow investment interests could be promoted ahead of development objectives," said María José Romero, policy and advocacy manager at the
European Network on Debt and Development (Eurodad).
"Using public resources to 'leverage' private finance is of great concern due to the high risk of profit-making motives outweighing poverty reduction objectives."
Hilary Jeune, Oxfam's EU policy advisor, expressed concern over the commission's decision to identify social services as an opportunity for private sector engagement.
"Areas like health and education should not be determined by profit margins," she said. "Governments should provide free and public essential services for all, and maintain stringent rules for any business which might risk hindering social and environmental progress."
If businesses were serious about helping to fight poverty, she added, all they needed to do was behave responsibly.
"By playing by the rules, avoiding practices which risk harming the most vulnerable, and paying a fair share of taxes, the private sector has great potential to pull people out of poverty," she said.
Concord, the European confederation for relief and development, said that while it welcomed moves to support the informal and microfinance sectors and empower female entrepreneurs and workers, the activities of private companies would need careful and constant scrutiny.
"Economic growth and job creation alone is not enough," said Ad Ooms, chair of Concord's private sector task force.
"Human rights and public interest must be safeguarded when using development aid to leverage private finance, including public-private partnerships."
The paper comes amid growing concern over the increasing levels of private sector involvement in development.
The G8-sponsored
New Alliance for Food Security and Nutrition – a
partnership between donor countries, multinational companies and 10 African countries – has recently attracted criticism and found itself facing accusations of neo-colonialism.
The alliance, which was launched in 2012, is intended to accelerate responsible investment in African agriculture and help 50 million people out of poverty by 2022.
But critics argue that the partnership is exacerbating poverty and inequality by prioritising its multinational investors over millions of smallholder farmers on the continent and encouraging African governments to ease export controls and tax laws.
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